Huntington Bancshares to buy FirstMerit Corp for about $3.4 bln

Huntington expects the deal, which would combine two of Ohio's midsize banks, to add to its earnings per share in 2017, excluding one-time merger-related expenses.

The deal, which is expected to be completed in the third quarter of 2016, is the latest in a string of mergers among smaller U.S. banks, spurred by years of near-zero interest rates and higher costs related to stricter regulations imposed since the financial crisis.

Huntington offered the equivalent of $20.14 per share for FirstMerit — 1.72 of its own shares and $5.00 in cash, a premium of 31 percent to FirstMerit's closing price on Monday on the Nasdaq.

FirstMerit's stock closed down 4 percent at $15.37 on Monday, while Huntington closed down about 4 percent at $8.80.

Under terms of the deal, FirstMerit will merge with a unit of Huntington Bancshares, and FirstMerit Bank, a unit of FirstMerit will merge with and into The Huntington National Bank, Huntington said.

The pro-forma company is expected to have nearly $100 billion in assets and will operate across an eight-state Midwestern footprint, Huntington said in a statement. The combination would create the largest bank in Ohio, based on deposit market share, it added.

Huntington will also expand its operations into new markets of Chicago and Wisconsin, it said.